9911796707
TMI Blog2014 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts any interest on the loans classified by it as non-performing assets - It is not a case where assessee had credited such interest and then claimed write off, Assessee might have been following mercantile system of accounting. The prudential norms prescribed by RBI, for non-banking financial Company u/s 45 Q of the RBI Act, made it obligatory for the assessee to classify the loans on which interest was not received for a period exceeding six months, as non-performing assets - Once it was so classified, interest could not be charged in its accounts and taken as income – Relying upon CIT Vs. Elgi Finance Ltd [2007 (6) TMI 180 - MADRAS High Court] - assessee was justified in not recognizing income from non-performing assets in consonance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the Notes on Accounts. The assessee had advanced a sum of Rs.300 Lakhs as term loan to NEPC during the AY.1996-97 for installation of wind mill at the Village Nallurpalayam, District Coimbatore. The term loan was given by the assessee to NEPC @ 17% for five years with a moratorium period of one year. M/s.NEPC paid interest on the said loan upto 31-03-1997 and thereafter failed to re-pay the instalments. The assessee classified the said loan as Non-performing Asset (NPA) in accordance with RBI guidelines. The Assessing Officer vide order dated 10-08-2010 passed u/s.143(3) r.w.s.147 of the Act held that the provisions of section 43D are not applicable to the assessee, as the assessee is neither a Public Financial Institution as defined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Tribunal dated 21-03-2013 relied on by the ld.Counsel for the assessee. The only issue in appeal is whether the assessee is entitled to claim the benefit of section 43D or not. It is an admitted fact that the assessee is a State Government company. Its entire paid-up share capital is held by the Government of Tamil Nadu. It is also not disputed that the assessee is providing long term finance for industrial projects. As per Explanation (f) to section 43D, 'State Industrial Investment Corporation' means a Government company within the meaning of section 617 of the Companies Act 1956 engaged in the business of providing long term finance for industrial projects. Section 617 of the Companies Act, 1956 defines a Government company as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, and management of non banking financial companies and was not relevant for ascertaining income under the Income Tax Act. Though assessee explained that by virtue of Sec.43D, it was necessary for it to offer such interest income, only when interest was realized, Assessing Officer was not impressed. An addition was made. 18. In its appeal before the CIT(A), argument of assessee was that interest was not at all credited to the profit and loss account. When interest was not at all credited, there was no question of accrual, especially since the assessee had classified the loan as non performing asset. Further, according to the assessee, Sec.43D was applicable, since Government of Tamilnadu by G.O. Ms. No.47 dated 09.01.1991 had declared it ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
